For "BPP"

Research on Safe Withdrawal Rates

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hocus2004
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For "BPP"

Post by hocus2004 »

This post is a response to comments by "BPP" put forward in the thread titled "Matters of Interpretation." The ordinary practice would be to respond in the thread in which the comments were advanced. In this case, the comments that I am responding to were taken from an e-mail exchange between bpp and JWR1945; they were not intended at the time they were written to be put foward on a public message board. It may be that bpp realizes why these comments are inappropriate for a public post. If that is the case, what he should have done is deleted the comments from the e-mail prior to making the e-mail public. Since he did include the comments in the public post, I need to respond, but I think it is better to respond in a separate thread as he has indicated a desire to have the "Matters of Interpretation" thread focus on technical aspects of the SWR question.

I first want to express my appreciation to bpp for participating in the e-mail exchanges with JWR1945 and for posting the exchanges at this board. Both are extremely constructive steps that benefit us all. Thanks, bpp!

Here are the problemmatic comments:

"Remember, your argument is not with the "proponents of the conventional methodology," as Hocus likes to think. Those people are not even participating in this discussion any more (at least not at this board). [Note: this was not a reference to raddr's board] The people who are arguing with you for the most part agree that valuations look high, and that that can't be good news, but you're losing folks on the insistence of a rigor that is not obviously there. (Hocus's obsession with board politics doesn't help, either, but that is a separate issue from the technical issues, which are the ones I would rather discuss.) "

I'll first address the question of board politics. I think it is fair to say that every member of every posting community would prefer that our SWR discussions be focused on questions of substance rather than board politics. There is only one clear exception to the general rule--intercst. Intercst got a number wrong in a study. It's no big deal, we all make mistakes. Rather than acknolwedge the error, he has elected to engage in a 25-month Campaign of Terror against any community member who posts in an honest and informed way on the subject of SWRs. That is a very big deal indeed. That campaign has cost us the loss of scores of fine contributors and is costing us the loss of more of them every month that it continues. I would like to see responsible community members take steps to bring that campaign to a quick and complete stop in the not-too-distant future.

If you are sincere (and I very much believe you are) in your desire to move the focus of the discussions to matters of substance, bpp, you can help. When you see a post that employs an obvious dirty posting practice like use of the word "troll" or the phrase "mental illness" or threats of physical violence, or whatever, step up to the plate and express your repulsion at the use of those ugly internet discussion board posting tricks. You are a member of this posting community and you have as much right as anyone else to want to keep it garbage-free. The garbage does not dispose of itself. It requires human hands to pick it up and carry it to the disposal. I would much appreciate your help, bpp, (and the help of many others) in execution of this important board community task.

No one finds much pleasure in talking about garbage disposal issues, but when the garbage begins piling up three feet high in the rooms where we sleep and eat and talk, it becomes a priority matter. If you do your part, bpp, and if all other responsible posters do their part, we can take care of the garbage disposal question in no time flat. Let's all do that and put this garbage disposal question behind us once and for all, shall we?

Zero tolerance from this day forward for the ugliest of the tactics that have been employed by Team Intercst for the first 25 months of these discussions. All agreed? I sure hope so. I would like not to need to bring this matter up again.

You refer to comments that I have made re "Proponents of the Conventional Methodology." You have the wording wrong. It is "Defenders of the Conventional Methodology" that I often make reference to. You say that you do not mean to make reference to participants at the raddr board with these comments of yours. That makes no sense. I developed the phrase "Defenders of the Conventional Methodology" specifically for the purpose of having an accurate way of referring to raddr and others who understand well the limitations of the conventional SWR methodology and yet continue to defend it on the various boards nonetheless.

The technical questions you raise in your e-mails with JWR1945 re his SWR methodology are good ones. The community obviously needs to hear both sides of the story, and JWR1945 obviously is not capable of setting forth boths sides all by himself. We need your help in trying to identify holes in the JWR1945 claims, and we need the help of a good many others as well. All this should go without saying, but, given the unusual way in which these discussions have proceeded for 25 months now, I'm not taking too many chances anymore. I'm stating and restating the obvious as many times as it needs to be stated and restated.

You point out that raddr and a good number of others who have posted at this board have acknowlwedged that changes in valuation obviously have an effect on the determination of SWRs. You are of course correct on this point.

Where you go off the rails is with the implication you advance that these posters have no responsibility to the community to acknowledge that, given the obvious reality that valuations affect the determination of SWRs, the conventional methodology is analytically invalid for purposes of calculating SWRs.

That is the big point of friction, bpp. It is the unwillingness of Defenders of the Conventional Methodology to give voice to this obvious truth which is keeping us mired in all of the nonsense gibberish we have all grown so sick of. If we had 20 respected posters come forward with clear statements that it is an act of deception for anyone to claim that the conventional methodology is a reasonable way of calculating SWRs (I mean after May 13, 2002, of course), we could shut down the nonsence and realize our dream of focusing the discussions on substance.

We need your help with this effort, bpp. There is no Discussion Board Fairy who is going to come from the sky and do it for us, bpp. We need your help. We need the help of you and other posters like you. We need people who understand the absurdity of the idea that it is possible to accurately calculate SWRs without taking changes in valuation into effect AND WHO ARE WILLING TO TAKE ON THE PERSONAL RISKS THAT FOLLOW FROM SAYING SO.

The wonder of community is that, if enough people do this, the personal risk associated with posting in an honest and informed matter on this question goes away. Smear Campagins directed at one poster almost always work. Smear Campaigns directed at two posters often work. Smear Campaigns directed at 10 posters rarely work. Smear Campaigns directed at 20 posters almost never work.

Each time that another community members comes out publicly against the Smear Campaigns, the odds of those campaigns succeeding diminish. We all want an end to the Smear Campaigns, do we not? We all want to discuss the substance of SWRs in a reasoned manner, do we not? We do. We need to stop pretending that there are some magical "other people" who are going to take the steps needed to make this little dream of ours come true. You are the "other people," bpp. You and all the others wishing with all their hearts for a change in the tone of the discussions are the "other people" that need to step to the plate.

Please do what you can do. Stick your neck out and it gives others the courage to stick theirs out too. Soon we have a snowball of community involvement so big that the Disruptors simply cannot continue. The truth of the matter is that even most of the Disruptors will be glad when the nonsence comes to an end. There are a good number of otherwise fine posters now working on behalf of the Disruptor's cause. They would feel a lot better about themselves if that cause were to be extinguished. You can make it happen, bpp. ONLY you can make it happen. There are no "others."

There is a sense in which those who acknowledge the effect of valuation changes do more damage to the community's understanding of these issues than those who genuinely don't have any idea of what they are talking about when they talk about SWRs. My sense is that intercst genuinely does not know what he is talking about. One thing that you have to say on intercst's behalf is that, there appears to be a good chance that in his heart of hearts he really does believe that a 74 percent allocation to stocks is a good thing even at today's valuation levels. He has engaged in all sorts of abusive posting practices, but the bottom line is that he really does believe that he is offering sound advice on the core substance question (I do not know this for sure, I am speculating based on the words that appear in the Post Archives.)

That's not a justification for this actions. It is a bit of an explanation for them, however.

How about the group that fully understands that valuation changes affect SWRs but continues with this pose that there is no need for those researching the question to include the factor of valuation changes in their determinations of SWRs? This group does MORE harm on the subtance side. From the standpoint of substance (not posting tactics, generally), this group is behaving in a more cynical manner than is intercst.

This group understands that the confidence that many community members still hold in the conventional methodlogy is in all likelihood going to cause them losses in the many millions of dollars. And yet they cannot bring themselves to put up honest and informed posts on the invalidty question.

These community members are letting the rest of us down. They don't even have the personal reasons that intercst possesses for trying to mislead fellow community members on these questions. Posters in this group have not gotten numbers wrong in studies that they published at internet sites. So why are they so reluctant to come forward with plain statements of the obvious truths re SWRs?

We now circle back to the process questions discussed above. The Post Archices solve the puzzle for us. In the early days, we had many, many community members willing to discuss the SWR question in reasonable ways. It is only after the Smear Campaigns and the death threata and the board bannings and all the rest that posters who possessed an understanding of the issues became reluctant to let on in public.

OK. That's somewhat understandable. People don't sign up at discussion boards to be put through this nonsense. So most people just take a walk when exposed to it. Those who have too much invested in a board community to take a walk put forward a few white lies to preserve their continued posting viability. It's not admirable, but it is somewhat understandable.

But for how long will we continue to do this? That's the question that we need to begin taking a serious look at. How long?

This issue can never go away. If I get hit by a truck this afternoon (don't be getting any funny ideas, Galeno!), the issue won't go away. There will still be lots of people in the world with an interest in learning how to achieve financial independence early in life. The accurate calculation of SWRs will still be a key part of effective Retire Early plans. The historical data will still say that changes in valuation levels affect long-term returns as a matter of "mathematical certainty" (Bernstein's phrase). So the issue will still be sitting there on the table. It can never go away until the last of these discussion boards goes away..

Is that what we want? Do we want every last FIRE/Passion Saving/Retire Early board to burn to the ground as the Motley Fool one has? Do we all want to achieve Clown Board status? Come on, people. This is not what we want.

Intercst does not want to acknowledge getting a number wrong in a study. We feel bad for him. Fine. That much is sensible, rational, reasonable.

Allowing him to burn every discussion board that hundreds of people interested in financial independence strategies have built over the past five years so that he won't have to admit making a mistake is not rational. It just isn't. It's insane.

It must be done the other way. We need rebuilding, not more destruction. Rebuilding starts when we start posting in an honest and informed way. I'm not talking just about the clueless ones who believe to this day that changes in valuation have zero effect on long-term returns. I am talking about those who acknowledge the effect of valuation changes and yet still refuse to say publicly that the conventional methodology is analytically invalid for purposes of determining SWRs. Posters in that group have responsibilities to the community. Posters in that group have the power to turn this thing in the right direction. We need the help of posters in that group.

Thanks again for the constructive portion of your post, bpp. The constructive portion was 95 percent of it, and that 95 percent was wonderful stuff. Please make more of an effort in the future to keep out the junk stuff. It would be much appreciated if you would actively do what you can to shut down others who continue to put forward nonsense gibberish. If you can't quite bring yourself to speak out against others just yet, at a minimum don't put forward any of that stuff in your own posts. We all want substance, bpp. We all have a responsibility both to ourselves and to the community at large to so what little we can to make reasoned substance-oriented discussions possible.

We have the power to improve the tone of these discussions. We need to work as a team to make it happen.

Make sense?
JWR1945
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Post by JWR1945 »

This is the kind of post that nobody likes to read. This is a post that absolutely must be read and understood. It seems like ancient history, only it is current history.

Bpp's questions about P/E10 and the break around 1920-1921 are the first since I first discovered that a relationship with Safe Withdrawal Rates existed. It was one of the very first posts on this board.

Nobody pursued the kind of reasoned discussions that Bpp has just engaged in. Nobody. There was a little bit of a discussion, not much, at first and then nothing of substance.

I have examined a host of alternative measures including the current P/E, Tobin's Q and all sorts of combinations. P/E10 is still the best.

There have been quite a few remarks dismissing my use of P/E10, but nothing dealing with substance. Just slogans. Meaningless slogans, but they have their effect.

For the most part, those who want to suppress discussions of substance have succeeded. They have the technical ability, but not the willingness, to help us as we search for the truth.

Have fun.

John R.
bpp
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Post by bpp »

This is the kind of post that nobody likes to read.
Rather than have to read more of this kind of post, I have deleted the paragraph in question. I still don't think what I said in that paragraph was wrong, but as I said, it is not the kind of stuff that I prefer to spend my time on.

Bpp
unclemick
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Post by unclemick »

In the end it's numbers. Remember Bogle's folly, all the flash and trash between Vanguard and Fidelity in the 'old' days. Convincing someone who has his mind made up is like ---- into the wind. No wonder Bogle is a grumpy old phart - er crusty curmudgeon since I'm a Boglehead. Index funds anyone?

I repeat- in the end it's the numbers.
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